The Baltic Innovation Fund 2 is signed, envisioning over EUR 300m to finance Baltic SME
The continuation of the Baltic Innovation Fund initiative has been ensured through the signature of the ‘Baltic Innovation Fund 2 agreement’, agreed by the European Investment Fund (EIF) and the three Baltic States.
Over the next five years, the Baltic Innovation Fund 2 (EUR 156m) will invest in private equity and venture capital funds that focus on the Baltic States, with the goal of further developing equity investments into small and medium-sized enterprises (SMEs), to boost growth in the region.
Three national promotional institutions – KredEx (Estonia), Altum (Latvia) and Invega (Lithuania) – will each commit EUR 26m, with the EIF contributing a further EUR 78m to the ‘Baltic Innovation Fund 2’. In addition, the selected fund managers will have to bring in financing from private investors, which would bring the total amount available for investments into the Baltic companies to over EUR 300m.
Pier Luigi Gilibert, Chief Executive of the European Investment Fund, stated, “The Baltic Innovation Fund is a perfect example how co-operation between the three Baltic States can bring powerful impact on the Baltic equity market. Via the BIF initiative, more than EUR 435m has been fundraised for investment in local companies, and we are proud that this capital has attracted local pension funds to participate more actively in the local ecosystem. Our continued partnership under the Baltic Innovation Fund 2 will further contribute to the development and long term sustainability of the Baltic equity market”.
Lehar Kütt, Chief Executive of KredEx, stated: “The first Baltic Innovation Fund is an excellent illustration of the three Baltic States acting together and making small capital markets more attractive for investors and creating further financing possibilities for enterprises. With the Baltic Innovation Fund 2, we will continue the positive development of our local equity markets and it will surely be of key importance in helping Baltic SMEs grow and hence assure further economic growth in the region.”
Juris Vaskāns, Member of the Board at Altum, noted: “The initiative of the Baltic Innovation Fund 2 will be a significant catalyst for the accessibility of private equity and venture capital to the enterprises of the Baltic States. Currently, in the Baltics, equity investments to GDP are still significantly lagging behind the European average. Therefore, we see a big potential increase in BIF2 capital inflows that will amount to up to EUR 100 million in Latvia alone. BIF2 will mainly focus on stable growth stage investees, thus perfectly supplementing the existing Altum venture capital funds that cover a variety of development stages, starting from early pre-seed to growth stage companies.”
Kęstutis Motiejūnas, Chief Executive of Invega, stated, “It is very important to ensure access to private equity for local companies in all stages of their development, as well as to attract larger market players and institutional investors to invest in the Baltic States. The Baltic Innovation Fund had the power to achieve all of this. Therefore, at the end of the Baltic Innovation Fund’s investment period, the continuity to be ensured by the Baltic Innovation Fund 2 is particularly required”.
The Baltic Innovation Fund 2 will be invested into equity funds selected by the EIF. Each fund manager will have to attract at least the equivalent amount of private finance from private investors, which will double the amount of investment capital within the initiative.
The European Investment Fund (EIF) is part of the European Investment Bank group. Its central mission is to support Europe's micro, small and medium-sized businesses (SMEs) by helping them to access finance. EIF designs and develops venture and growth capital, guarantees and microfinance instruments that specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment.
KredEx is a financing institution helping Estonian enterprises develop quicker and expand more safely to foreign markets, offering loans, venture capital, credit insurance and guarantees with state guarantee. KredEx is constantly developing its services in cooperation with other financial market participants in order to offer appropriate financing options in a changing economic environment. For more information, see www.kredex.ee.
Altum is a state-owned development finance institution, which offers state aid for various target groups with the help of financial tools (such as loans, credit guarantees, investing in venture capital funds, etc.). ALTUM develops and implements state aid programmes to compensate for the market's shortcomings that can't be solved by private financial institutions. In June 2017 ALTUM received international credit rating Baa1 by Moody’s which approves its strong financial stability.
Invega is a national promotional institution owned by the Republic of Lithuania. Invega aims to implement various State-financed financial instruments as well as other measures intended to support business at the different stages of its activity, to create and/or retain jobs as well as improve SMEs’ competitiveness.